Barclays has fanned flames over City bonuses after its announcement that it is giving a 10% raise in bonuses for 140,000 staff – just as the bank reports profits have fallen 32%.
This adds to the current controversy over its decision to axe up to 12,000 staff over 2014 to reduce costs and fight the falling income of its investment arm, where profits dipped heavily in 2013.
Backlash is expected from politicians and taxpayers, who bailed out much of Barclays after the financial crisis of 2008.
Antony Jenkins, promoted to Barclays’s Chief Executive after the Libor rigging scandal which cost the bank GBP 290 million in fines, has defended the resolution to increase bonus payouts within Barclays – which saw its profits as a whole fall from GBP 5.2 billion from GBP 7 billion.
Being paid across the bank, the bonuses total around GBP 2.4 billion – up from GBP 2.2 billion a year ago.
Within the figure for 2014 it has been revealed investment bankers enjoyed bonuses of GBP 1.6 billion; up GBP 0.2 million from last year’s figures.
The average bonus for each staff member was around GBP 17,000 (up from £15,600 last year), whilst investment bankers received an average of GBP 60,100 (up from GBP 54,500).
This is in spite of the fact the investment banking arm of Barclays suffered a 37% loss on its yearly profits.
Jenkins insisted that bonuses were down 32% from 2010, and that the pay hike was necessary to motivate and retain staff in a globally competitive environment.
“We employ people from Singapore to San Francisco,” Jenkins said.
“We compete in global markets for talent. If we are to act in the best interests of our shareholders, we have to make sure we have the best people in the firm.”
Furthermore, he told BBC Radio 4’s Today programme that Barclays needs to “pay for performance” so as to remain competitive.
Jenkins also stated Barclays was acting well within the “spirit and letter” of the law.
The move comes as Jenkins warns as many as 12,000 jobs could be cut as he seeks to reduce costs via technology and role reductions.
Frances O’Grady, General Secretary at the Trade Union Congress, accused Barclays of “sticking two fingers up to hard-pressed families across Britain.”
Labour used the figures to call for the reestablishment of the bonus tax.